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Union of India (UOI) vs. R.K. Sharma and Ors. - (Supreme Court) (28 Apr 2021)

Benefits flowing from MACP Scheme are incentives and not part of pay



The short question that falls for consideration of present Court in present Appeals is whether the Government of India is justified in implementing the Modified Assured Career Progression Scheme ( ‘MACPS’) for civilian employees of the Central Government in Groups ‘A’, ‘B’, ‘C’, ‘D’ and officers in the All India Services, Chairpersons, Members of the Regulatory Bodies (except the Reserve Bank of India) with effect from 1st September, 2008 and not from 1st January, 2006.

The Respondent was appointed as Deputy Director in the Bureau of Industrial Costs and Prices in Ministry of Industry, Department of Industrial Policy and Promotion which was subsequently merged with Tariff Commission. He was promoted as Director in grade pay of Rs.3700-125-4700-50-5000 by an order dated 9th February, 1994. Certain recommendations were made by the 5th Central Pay Commission relating to the Assured Career Progression Scheme (‘ACPS’) for Central Government civilian employees in all the Ministries/Departments which came into force w.e.f. 1st January, 1996. Department of Personnel and Training by a memorandum dated 9th August, 1999 directed implementation of the recommendations of the 5th Pay Commission regarding ACPS in respect of Group ‘D’, ‘C’ and ‘B’ officers and those holding isolated posts in Group ‘A’.

In Union of India vs. M.V. Mohanan Nair, a three Judge Bench of this Court considered the ACPS as well as the MACPS to hold that, the schemes are in the nature of incentive schemes which were brought into force to relieve stagnation. This Court was of the considered view that, the Respondents therein were entitled only to the benefit of next grade pay in the pay band and not to the benefit of grade pay of next promotional post. As the MACPS is a matter of Government policy pursuant to the recommendations made by the Pay Commission, this Court refused to accept submissions of the employees that MACPS should be made applicable w.e.f. 1st January, 2006.

In view of the judgment of this Court in M.V. Mohanan Nair, the Respondents and other similarly situated employees are entitled for financial upgradation under MACPS only to the next grade pay and not to the grade pay of next promotional post. It is clear from the resolution dated 30th August, 2008 that the recommendation of the 6th Pay Commission was accepted by the Government and was made effective from 1st January, 2006 in respect of civilian employees with regard to revised scales of pay and dearness allowances. In so far as the revised allowances other than dearness allowance, recommendation of the 6th Pay Commission were given effect from 1st September, 2008. The judgment in M.V. Mohanan Nair clinches the issue. Benefits flowing from ACP & MACP Schemes are incentives and are not part of pay.

The resolution dated 29th August, 2008 is made effective from 1st September, 2008 for implementation of allowances other than Pay and DA which includes financial upgradation under ACP & MACP Schemes. Therefore, the Respondents and other similarly situated officers are not entitled to seek implementation of the benefits of MACPS w.e.f. 01.01.2006 according to the resolution dated 29th August, 2008. Moreover, the implementation of MACPS by granting financial upgradation only to the next grade pay in the pay band and not granting pay of the next promotional post w.e.f. 1st January, 2006 would be detrimental to a large number of employees, particularly those who have retired. Uniform implementation of MACPS for civilian employees w.e.f. 1st January, 2006 would result in large scale recoveries of amounts paid in excess. The judgment of the High Court is set aside. Appeals allowed.


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